Prepare the format of balance sheet and explain the various elements of balance sheet.
The Balance Sheet shows all assets owned by the concern, liabilities payable to outsiders or creditors, and claims of the owners on a particular date. It depicts the financial position or strength of an undertaking.
Format of Balance Sheet
| Particulars | Note No. | Amount (Rs.) |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| 2. Non-Current Liabilities | ||
| 3. Current Liabilities | ||
| Total | ||
| II. Assets | ||
| 1. Non-Current Assets | ||
| 2. Current Assets | ||
| Total |
Explanation of Elements: As per Schedule III of the Companies Act, 2013, the balance sheet is prepared in a vertical format. I. Equity and Liabilities represents the sources of funds. It includes Shareholders’ Funds (like share capital and reserves) and Non-Current Liabilities (like long-term borrowings).
II. Assets represents the application of funds. It includes Non-Current Assets (like Goodwill) intended for continued use, and Current Assets (like cash and cash equivalents) held for sale or consumption. Disclosure on the face of financial statements or in notes is essential and mandatory.
Explanation
The answer is constructed using the definition of a Balance Sheet from the first context chunk, which highlights assets, liabilities, and owners' claims. The format is derived from the 'Solution' table in the context (Exhibit 3.1 style), organizing it into 'Equity and Liabilities' and 'Assets'. The explanation incorporates the legal requirement of Schedule III of the Companies Act, 2013, mentioned in the 'Important Features of Presentation' section. It categorizes elements into Shareholders' Funds, Non-Current Liabilities, and Assets (Non-Current and Current) based on the provided solution structure.